Posts tagged ‘carbon’

Some potential near-term graphite miners find time to revise their plans

If the graphite game can be called a race to production, some companies seem to prefer the sure and steady progress of the tortoise. The hare’s dazzling example might have been discouraged by this year’s graphite price slump, down 20% according to Industrial Minerals. Even so, the authoritative journal anticipates a recovery next year, although not as strong as 2011. Those conditions might have inspired some front-running companies to revise their previous plans.

One of them is Focus Graphite TSXV:FMS. On November 7 the company released an updated preliminary economic assessment, replacing the previous PEA released in October 2012 for its Lac Knife project in northeastern Quebec. Thanks to streamlined metallurgy, the new study reports improved economics—the pre-tax internal rate of return increases to 36.4%, compared to 32% in 2012, and the pre-tax net present value to $317 million, compared to $246 million last time around.

Interestingly, the 2012 report omitted after-tax numbers. But the current figures show a post-tax IRR of 28.6% and NPV of $185 million, using an 8% discount rate. Using a 10% discount rate, as was done in 2012, the NPV shows $250.1 million pre-tax and $143.3 million post-tax.

Both studies relied on the January 2012 resource estimate to calculate a 20-year mine life for an open pit unearthing 300,000 tonnes per annum for a lifetime total of six million tonnes averaging 15.66% graphitic carbon (Cgr). But higher-grade concentrates shown by more recent pilot plant tests now cut operating costs.

No longer relying on a third party “and the associated $27.6 million in working capital requirements” to purify some of the concentrate, Focus says an optimized flotation and polishing circuit can produce concentrate of 98% total carbon for all flake sizes above 200 mesh. As a result, the company maintains, even the smaller flake product will see improved economics.

In a statement accompanying the announcement, Focus CEO Gary Economo said the company has started a feasibility study which “moves us closer to financing, securing off-take agreements, permitting and construction.”

Another potential near-term producer reconsidering its plans is Northern Graphite TSXV:NGC. The company first filed a feasibility study for its southeastern Ontario Bissett Creek project in August 2012. An update followed in September 2013. Then, on October 23, Northern announced a PEA that considers doubling mill throughput after three years of operation.

The plan would knock six years off the previous 28-year mine life but increase average annual production to 33,183 tonnes of concentrate, from 20,800 calculated in September. That would result in a 22% after-tax IRR (compared to 17.3% in September) and a $150-million after-tax NPV (compared to $89.3 million), using an 8% discount rate.

The new scenario would help meet expected growth in demand, the company stated. CEO Gregory Bowes sees an advantage for Bissett Creek in a graphite supply chain that he describes as “heavily dependent on China and … characterized by many inefficient producers with poor environmental and labour practices and inconsistent product quality, delivery and reliability.”

President/CEO Aubrey Eveleigh stated, “The company is very excited with these latest drill hole results. They confirm that the Albany Graphite Deposit has exceptional size potential. The company expects to release further news next week on more drilling presently being completed 450 metres east of the above-reported drill holes.”

Energizer holds a 75% interest and acts as project operator on the Joint Venture Property, which surrounds Energizer’s wholly owned Green Giant Graphite-Vanadium Property on three sides. Energizer has identified 17 graphite trends with a cumulative strike length of more than 320 kilometres on the Green Giant and JV properties. Within two weeks the company plans to begin a Molo resource delineation program, which will take an estimated two months to complete. Shortly after drilling begins, DRA Mineral Projects will begin quantifying data for a preliminary economic assessment of the Molo deposit.

Energizer holds a 75% interest and acts as project operator on the Joint Venture Property, which surrounds Energizer’s wholly owned Green Giant Graphite-Vanadium Property on three sides. Energizer has identified 17 graphite trends with a cumulative strike length of more than 320 kilometres on the Green Giant and JV properties. The company believes this project has the potential to host a graphite camp with multiple zones.

Energizer Resources Inc TSX:EGZ announced results from its Green Giant Property in Madagascar. The drill result shows 6.24% carbon over 118.6 metres. This assay increases a result previously reported on January 19, 2012, that showed 7.46% over 61.4 metres.

VP of Business Development Brent Nykoliation tells ResourceClips.com, “At 118 metres of 6.24% carbon, this is an excellent result. We have 17 zones. We’ve drilled seven of those zones, and the assays will be coming back over the next few weeks.

There’s no other company and no other place we know of that has a graphite discovery of this magnitude—a cumulative 320 kilometres—Brent Nykoliation

“We’ve identified what we believe to be a graphite camp. We can say that because we’ve identified 17 distinct graphitic zones, we have a cumulative strike length of over 320 kilometres. That’s absolutely massive. We already had a delineated vanadium resource of almost 60 million tonnes. That was in our original property of 21 kilometres and that vanadium represents only about 20% of our 21-kilometre trend. Then on top of that we increased our vanadium trend by about 50 kilometres.

“Our joint venture property with Malagasy Minerals MGY surrounds our original property on three sides. We hold a 75% interest in the JV and we’re the project operator.

“The JV property is significant for two reasons,” Nykoliation says. “First, we knew the vanadium was going to travel south of our border, so we made the deal to secure the extension of the vanadium. But second, we also found that graphite was in our vanadium trend. So in our 100%-owned property we have about 3.8% graphitic carbon with the vanadium. At that point, we understood that we had graphite on the property and much higher grades in areas that were exclusively graphite and no vanadium. Those areas have now been defined.

“Our property went from 21 kilometres to 120 kilometres long, and we have tied up about 75% to 80% of a very significant zone in southern Madagascar which is known for very rich graphite and vanadium,” he reports.

“There’s no other company and no other place we know of that has a graphite discovery of this magnitude—a cumulative 320 kilometres. There’s graphite and vanadium all over the place. As our VP of Exploration Craig Scherba says, it’s very rare to find those two together. So we have two strategic minerals in one source.

“We’re moving very quickly to delineate a 43-101 resource on the graphite. We need to determine where in the 17 zones we’ll delineate that resource. Madagascar has a rainy season that usually ends in March or April, and we anticipate getting back in April or May. We expect to have a 43-101 resource by July or August of this year. We expect to have a PEA completed probably by September or October, and then we’ll be in a position to have a bankable feasibility, along with a pilot plant project that would start earlier, by December of this year.

“The reason we can fast track this is our partnership with DRA Mineral Projects, Africa’s leading mine development firm,” he emphasizes. “DRA runs 29 mines around the world. They run mines for Xstrata, Rio Tinto RIO, Vale, and now they’re partnering with us. They’re the ones who’ll do our PEA and our bankable. In 18 to 24 months, assuming we hit all our timelines, we could have a mine open up. DRA could be our total engineering, construction, procurement and management solution for mines.

“So the question is, are we a vanadium company with a graphite credit or a graphite company with a vanadium credit? The answer is, we don’t know yet.

“The capex on a graphite mine is much lower than on a vanadium mine. So graphite might be the springboard to get the mine open. Then the revenue from that would help fund our vanadium operation,” he says.

“The vanadium and graphite are very close. In some cases they’re together, in other cases they’re a trend over from each other. So we could definitely mine two strategic commodities from one source. For shareholders, that means the opportunity for off-take agreements with multiple partners. We’re in a position to supply both the steel market and the battery market. We’re already in discussions with possible offtake partners.

“Our location is another huge advantage,” Nykoliation adds. “We’re close to the Chinese market. We’re perfectly situated for South Africa, one of the largest vanadium consumers in the world. We are ideally situated for Europe. Madagascar is an extremely mining-friendly jurisdiction. But it also has location, location, location.”

Nykoliation concludes, “We have a dual offering—two strategic minerals, one source. We have a very large project, and we’re fast-tracking it. We have a great partner in DRA and a great location in Madagascar. We’re uniquely situated in the market.”